The Science of Hard Choices

WASHINGTON
— ALICE RIVLIN, who headed the Congressional Budget Office from its beginnings in 1975 until 1983, is one of nation's most visible and respected public policy analysts. Noted for her lucid prose, straightforward manner, and unbiased use of the numbers, she has been director of the Economic Studies Program at the Brookings Institution, has won a MacArthur Fellowship, and has authored or co-authored a small shelf-full of books on policy issues. Then why, if her interest is so solidly in public policy, did she choose to become an economist?

The answers that emerge during an interview in her office at Brookings, where she is now a senior fellow, include an invalid grandmother, a summer-school course, and sexism at Harvard University in the early 1950s.

Raised in an academic household in Bloomington, Ind., she recalls that ``public policy was very important in my family - it was a dinner-table subject all the time.'' Her father, a physicist at the University of Indiana, was active in science policy at the end of World War II. Her mother, though not a college graduate, was ``a very bright person who trained herself'' in foreign policy issues. Her mother worked with China relief activities, recalls Mrs. Rivlin, and ``we had a steady stream of Chinese students in the house in the late '30s.''

At age 13, the family moved for two years to Washington. Her mother became spokeswoman on foreign policy for the League of Women Voters and took her daughter with her on several occasions when she testified before the Senate Foreign Relations Committee.

Filled with those experiences, the young Alice went off to Bryn Mawr College to major in history. But the next summer, because her mother needed help caring for her grandmother, she lived at home in Bloomington. ``And I decided, `Well, I'm here, I might as well go to summer school.'

``So I took an economics course at Indiana University. It was taught by a very talented young professor, and I loved it. It seemed more definite and easier to grab hold of than history - and it was a little clearer what one might do with it.''

Changing her major to economics, she spent ``a very important summer'' as an intern in Washington at the Economic Cooperation Administration (now the Agency for International Development). After a year in Paris working for the agency that administered the Marshall Plan, she decided to apply for graduate work at the Littauer School of Public Administration at Harvard.

``They wrote me back a letter which said that, `while we do not have an absolute bar to the admission of women, we do not admit women of marriageable age,''' she recalls. ``And I was 22.''

She enrolled instead in the Economics Department, received her PhD from Radcliffe College in 1958, and joined the Brookings Institution. During the Johnson administration she served as an assistant secretary for policy and planning at the Health, Education, and Welfare Department. Even today, she thinks of herself less as an economist than as ``a public policy person.''

``One of the things that's happened in economics in the last few years,'' she observes, ``is that those of us who are primarily interested in policy have found ourselves somewhat isolated. The discipline has moved very much into theory and quite a long way from policy.''

She's well aware that economics, frequently the butt of popular derision, is known as ``the dismal science.'' She thinks of it, instead, as ``the science of hard choices.''

``The basic economic problem is how to use limited resources most efficiently. Economics is to a very large extent focused on choices and options and alternatives. I personally have found myself very frequently in the role of saying to politicians, `You're not facing this choice.' The [federal] budget dilemma is a case of the political system not being able to come to grips with the necessity of choice. The government ought to be paying for what it's buying, but it's not. It's very easy to borrow, and we run up these big deficits.''

Is there, then, a science to economics?

``What economists do is try to figure out how the economy works,'' she explains. ``The economy is a very complicated system. It is not unlike other complicated systems, like the human body or the weather systems, where you are trying to analyze data about the system to figure out how it works. So I think it's a science in that sense.''

But that doesn't mean, she notes, that economics is necessarily good at predictions. ``The analogy I like is that, if you asked your doctor, `How am I going to feel next week?' he would laugh at you. He can't predict that. He doesn't try.... He doesn't think it's an interesting question. The body itself is too complicated.

``And yet most people think that economists ought to have an answer not only to the question, `What is the economy going to be doing next week?' but, `What's it going to be doing next year?' And if they can't, there's something wrong with them.''

Rivlin concedes that economists, like doctors, don't always factor into their equations all the relevant information. Mainstream economics, she says, is still based on assumptions ``which usually involve rationality, perfect knowledge, and lots of things that in fact don't happen. And that's why the theory is often so irrelevant to what those of us who work on the forefront of the policy dilemma have to deal with.''

Where is the economics of public policy headed?

``I think there are two things we know about the economics of the next few years which are not controversial at all. One is that we're going to have to deal with the rapid aging of the population, as the baby boom generation reaches retirement age.''

While that change is not unique to the United States, Rivlin notes that ``it's quite sharply defined here. We had a big bulge in births immediately after World War II which continued into the '60s.''

The second basic shift is the globalization of the economy. In the past, although the United States was marginally involved in foreign trade and finance, that did not figure largely in the nation's gross national product. ``Now when you wake up in the morning and turn the radio on, the first thing you hear is the gold price in London and yesterday's stock market close in Tokyo. That's new. Nobody cared about that 20 years ago.''

Also rising in importance are the economic problems of the less-developed nations. She faults the US for focusing too narrowly on Western Europe and Japan.

``I think as the cold war recedes, the major powers are going to have to face up to the fact that there are lots of sources of instability in the world - in Eastern Europe, in the third world, in India and Pakistan, and so forth....Increasingly, those countries have sophisticated modern weapons, and in some cases nuclear weapons.

``That's a world problem: It's not something that can be ignored. In terms of trade, we need raw materials, we need markets - but mostly we need stable, orderly development in the world that doesn't threaten some kind of eruption into war.''